(Recasts first paragraph, adds Uribe comment in paragraph 4)

By Patrick Markey

BOGOTA, June 1 (Reuters) - Colombia transferred jailed rebels on Friday under a plan to free them in hopes of persuading guerrillas to release hostages they have held for years, including a French-Colombian politician and three Americans.

President Alvaro Uribe, a Washington ally, says he will free several hundred guerrillas as an act of good faith he hopes will convince rebel commanders to liberate around 60 key hostages, some of whom have been held for more than five years in secret jungle camps.

Dual French-Colombian citizen Ingrid Betancourt was snatched by rebels in 2002 while campaigning for the presidency and the three U.S. citizens were captured when their light aircraft crashed in the jungle during an anti-drug mission.

"We are moving ahead with this unilateral gesture in an effort to free those who today are subject to torture by the FARC," Uribe said in a speech in which he repeated his charges that the guerrillas kept hostages in conditions worse than those at a concentration camp.

The hostage issue is sensitive in Colombia, where violence has dropped sharply under Uribe even though the Revolutionary Armed Forces of Colombia, or FARC, rebel force is still fighting Latin America's longest-running insurgency.

The government said on Friday jailed FARC members were transferred from 50 prisons nationwide to Chiquinquira penitentiary to the north of Bogota as a first step. Once freed, the Catholic Church and foreign observers will monitor them to see they do not return to rebel ranks.

France, Spain and Switzerland are all involved in efforts to broker a deal between the government and the FARC, but so far the two sides have failed to hammer out negotiations on exchanging jailed rebels for kidnap victims.

Helped by billions of dollars in U.S. aid, Uribe has sent troops to push back the FARC into the jungles, take back areas once under their control and disarm thousands of illegal paramilitaries who once fought the rebels in a dirty war.

Details of life in secret rebel hide-outs surfaced last month when a police officer who escaped after nine years in rebel captivity said he was held with Betancourt and the Americans until he fled at the end of April.

Betancourt was often chained by her neck to stop her escaping, but he said the American men appeared resigned and feared fleeing into the jungles.

The FARC, which began as a peasant army in the 1960s but is now engaged in Colombia's cocaine trade, wants Uribe to pull back troops from a rural area the size of New York City to facilitate hostage talks.

But Uribe has said that is unacceptable and points to a similar demilitarized zone set up by his predecessor which the FARC used to regroup before peace talks failed. He has ordered the military to hunt down the hostages.

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